How Coca Cola is selling sugared water for 150 years consistently
Hi, there im Rahul Chakrapani today trying to understand how the business and marketing models of Coca Cola,
a detailed analysis of coca cola’s marketing case study, trying to understand what we can learn from coke.
before we jump in I just wanna make a few things very clear
Number one, in no way, I’m not trying to promote Coke.
Number two, Coke is nothing but sugared water and a lot of sugar is not good for your body,
so do not consume Coke in excessive quantities.
And third and most importantly What I’ve just told you is that
Coke is nothing but sugared water and it’s bad for health; everybody knows about it.
But have you ever wondered, in spite of this brand merely selling sugared water
how is it that they are able to generate billion-dollar profits every single year?
And not just that.
Coca-Cola is a company that has survived for more than 111 years
which includes 7 revolutions and 2 World Wars.
The question is How is it possible that a company selling sugared water
could make a billion dollars
in spite of having competitors which are much tastier than Coca-Cola and much healthier than Coca-Cola.
And a simple example of that is the lemonade business in India.
The answer to that is that Coca-Cola deploys a genius marketing strategy
because of which Coca-Cola is able to make a billion dollars in profits merely by selling sugared water.
So if you’re here to learn something incredible
Let’s do a deep dive and try to understand one of the greatest marketing strategies
ever known to mankind and that is Coca-Cola.
A Reserach About Coca Cola
In 2005,
there was this scientist called Reed Montague who conducted a very simple experiment to try and understand
as to what exactly is the difference between Coca-Cola and Pepsi and which one was more preferred by people.
So he conducted this simple experiment with 3 iterations.
In the first iteration,
he placed two bottles one of Coke and the other of Pepsi
and he took off the label so that people couldn’t identify on the outside which one is Coke and which one is Pepsi.
So, when he called the subjects to come and taste both the colas
he scanned their brains through an fMRI scanner.
And the first iteration when people came and tasted both the colas
from the bottles which were not labelled.
They were not even able to identify the difference between both the colas.
And the fMRI scanner also did not show any difference in the reading.
So he sends them back and calls them in for a second iteration
This time, he puts the labels back on so that people can identify which one is Coke and which one is Pepsi.
This time when the subjects come and taste Pepsi nothing happens.
But the moment they tasted Coca-Cola, the fMRI scanner showed a significant difference in the reading.
That’s when Reed Montague thought, ‘Maybe there’s something to the recipe.
So let’s send them back and call them in for a third iteration.’
This time he swapped the logos,
which meant that the bottle that contained Coca-Cola was now labelled as Pepsi and
the bottle that contained Pepsi was now labelled as Coca-Cola.
This time when the subjects came and tasted the cola from the Pepsi labelled bottle nothing happened
But the moment they tasted the cola from the Coca-Cola labelled bottle the fMRI scanner showed the same
a significant difference in the reading.
And that is when Reed Montague understood that it’s not the cola, it’s not the bottle,
it’s not the subjects it is just the flash of the red colour logo of Coca-Cola that made
that significant difference in the reading.
Iconic Marketing vales
Now, to put that straight person in front of the scenes,
it’s just the 3-second logo flash that made a significant difference in the reading and
altered the very perception of people whereas behind the scenes,
it clearly justifies the billion-dollar budget that Coca-Cola takes out every single year
to establish itself as the brand icon of happiness.
Now,
the question is what do we exactly mean by the brand icon of happiness.
So for that let’s try to understand the fundamentals of marketing.
So every product, service, has two kinds of values
The first value is the Tangible value which is the real value of the product
the second value is the perceived value.
Now, just to give you a simple example
for example, a restaurant.
Now, when you go to a restaurant the aroma, the room freshener,
the ambience, the lighting is what is going to make up for the perceived value of the product.
It is going to enhance your perception of the experience And the tangible value of the product
is how well the food is cooked So if I serve you rotten chicken in the best restaurant
in the world you’re still not going to like it, right?
Because the true value of the product is nothing but the product of the tangible value and
the perceived value So even if one of them is bad the value of the product goes down.
Similarly,
if I were to serve you the best food in the world but I put dead cockroaches around
the table you’re still going to feel disgusted, right?
Now, the question is you still have the best food on the table and the cockroaches are not even inside the food.
Why do you still not like experience?
And the answer to that is
even though the tangible value of the product is great
the perception of the product has been degraded to such an extent
that the experience is completely ruined.
So every company needs to make sure that it is able to build great products
hence bringing up the tangible value of the product and it has to make sure that
the marketing strategies are so well designed that it is able to enhance the perception of the product in the minds of the people.
Now, when it comes to Coca-Cola, the tangible value of the product is sugar
and by default, scientifically speaking sugar is bound to give you pleasure whereas
when it comes to the perception of the product
Coca-Cola does an extraordinary job by associating itself with the emotion of happiness.
Coca Cola in India
Now a classic example of the association with emotion can be seen when Coca-Cola penetrated
the Indian population using its remarkable marketing strategy.
So to put that straight, when Coca-Cola came to India they were facing a hard time
because they did not know what type of commercial to bring in which is going to resonate with the entire country
because we are such a beautifully complex country that when you go
From one state to another the tradition changes, the culture changes,
the language changes lifestyle also changes.
So, how does a brand come out with a commercial which is going to resonate with the entire country?
And that is when after doing deep research they found this beautiful recipe of something called the game of cricket.
Because Coca-Cola, after doing deep market research, understanding that in India, regardless of your religion, caste, race, sex
in the game of cricket,
everybody is an Indian and everybody is going to cheer, “Sachin! Sachin!”
And guess what they hired Sachin Tendulkar as their brand ambassador and came out with a beautiful campaign called
“Coke ki khushi, Cricket ki Khushi”
And they came out with a bunch of commercials that portrayed the true essence of the game of cricket and this is what the commercial looks like.
If you look closely at that commercial,
it is not even talking about the product until the last 3 seconds
because you know what while good brands sell you products, legendary brands sell your emotions and
that is the secret behind Coca-Cola’s genius marketing strategy.
CR 7 in Euro Cup
recently a few months ago how many of you remember Cristiano Ronaldo is changing bottles and
that affected millions in shares of coca-cola globally . stock market across the globe was effected by this action
in a press conference, he made the bold statement
Coca Cola’s Lessons of marketing
So, to put that straight, there are a few lessons that you need to learn as an entrepreneur if you want to do the same for your product.
Number one,
like I said while good brands sell you their product
legendary brands will always try and sell you an emotion.
Number two,
it is okay if you don’t talk about specifications. All you have to do is tell a great story.
And if you do that you’re going to resonate with your customers
more than anybody else.
Number three
and most importantly
even if you’re selling sugared water, you could still make a billion dollars
That’s all for today guys.
